Tsy Quarterly Refunding Estimates

With infrastructure spending bill, Tsy financing needs into 2022 still uncertain -- it's unlikely that the Tsy will make any changes to coupon auction sizes at this Wed's quarterly refunding announcement. Sell side opinions as to when vary:

• "Given Treasury's 'regular and predictable' approach to debt management", Goldman Sachs expects "major cuts" in coupon auction sizes to start this Nov'21. "With the budget deficit likely to decline by more than 50% in FY22, and Treasury projected to remain more than adequately financed from its calendar of coupon offerings in FY23 and beyond, we think this requires relatively large adjustments to auction sizes through mid-2022."
• GS projects "monthly 2-, 3-, and 5- year auction sizes dropping by $12bn between November 2021 and April 2022, and project 7-year auction sizes are cut by $18bn over the same period." GS estimates larger "cuts for the 7-year note and 20-year bond compared to other surrounding maturity points" that "will reduce gross issuance of coupons by $814bn in 2022 compared with 2021."
• UBS analysts agree that November is a likely time to annc coupon cuts, but due to the uncertainty over size of fiscal packages not to mention the spread of the Delta variant outlook, UBS expects the first auction cuts in May of 2022 (or perhaps Feb'22 at the earliest) "will be aggressive and will be more pronounced in the long end, particularly to the 20y."